Johnson & Johnson (JNJ) Posted Q4 Earnings BeatJohnson & Johnson (JNJ) recently reported its fourth-quarter earnings, showcasing a performance that beat analyst expectations with an EPS of $2.04 against a forecast of $1.99 and sales of $22.52 billion, in line with the anticipated $22.45 billion. Despite this positive financial news, J&J's stock took a tumble, closing down 1.9% at $145.27 after issuing guidance for 2025 that fell short of Wall Street's expectations. The company projected sales between $89.2 billion and $90 billion, below the Street's estimate of $91.04 billion, and an adjusted profit per share from $10.50 to $10.70, bracketing the consensus of $10.55.
A Mixed Bag
Innovative Medicines Shine: J&J's innovative medicines segment saw a 4.4% growth, contributing significantly to the quarter's performance. Standout performers included Spravato, which grew by 44% year-over-year, and cancer drugs like Darzalex and Erleada, alongside blood thinners which increased by nearly 30%. However, the looming patent expiration for Stelara, a major immunology drug, casts a shadow over future earnings from this segment.
MedTech Segment Under Pressure: On the downside, medical device sales underperformed, coming in at $8.19 billion against expectations of $8.22 billion. This segment faces challenges, particularly in China, but there's optimism with new investments and product launches like the Ottava surgical robot, which could challenge Intuitive Surgical's market dominance in the future.
External Headwinds: J&J is dealing with several external pressures including foreign exchange issues, which have impacted their sales guidance for 2025. Additionally, potential generic competition and ongoing litigation related to talc products continue to be significant headwinds.
Technical Analysis
Premarket Recovery: Despite the post-earnings drop, NYSE:JNJ shares showed a 0.60% uptick in premarket trading on Thursday, suggesting some investor confidence returning.
RSI and Patterns: The Relative Strength Index (RSI) at 50.48 indicates a moderate condition, neither overbought nor oversold, providing a balanced outlook.
The stock's monthly chart shows a falling wedge pattern, typically a bullish indicator if broken upwards. A breakout above this pattern could signal a bullish campaign for $JNJ. However, there's a risk of further decline if the support at $145 breaks, potentially leading to a dip towards the one-month low of $140.
Moving Averages: NYSE:JNJ currently trades below its 50-day moving average, suggesting short-term bearish sentiment, but a recovery above this average could signal the beginning of a recovery trend.
Forward-Looking Perspective
Despite the immediate challenges, analysts like Edward Jones' John Boylan see J&J's guidance as conservative but achievable, particularly with the company's strategic focus on new product development and pipeline expansion in both pharmaceuticals and medical technology. The emphasis on cancer drugs, robotics, and cardiovascular products is seen as a pathway to long-term growth and margin expansion.
Conclusion
Johnson & Johnson, while grappling with short-term headwinds, holds a portfolio of products with strong growth potential. The technical setup suggests that if JNJ can maintain or surpass current support levels, there's room for optimism. Investors might see this as an opportunity to buy into a dip, given the company's history of innovation and resilience. However, caution is advised due to the external factors and regulatory challenges ahead. The broader narrative for J&J seems to hinge on its ability to innovate and adapt in a rapidly changing healthcare market environment.
